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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

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Speaker 1: In terms of how did we get to this point

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Speaker 1: and how did we go from a confrontation to now

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Speaker 1: being partners, We just realized that we were better off

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Speaker 1: together than we were fighting or apart.

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Speaker 2: It was an announcement that shocked and bewildered PGA players

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Speaker 2: and fans alike. After a nearly year long, acrimonious legal

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Speaker 2: battle with Saudi Arabia's Live Golf, seemingly out of the blue,

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Speaker 2: the PGA Tour agreed to merge with Live, combining their

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Speaker 2: golf related business and rights into a new commercial entity,

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Speaker 2: with perhaps a key factor Saudi Arabia's public investment fund

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Speaker 2: investing billions into the new venture. Rory, who's been the

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Speaker 2: loudest critic of Live, said he feels like a sacrificial lamb.

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Speaker 3: I still hit Live like I hit Live like I.

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Speaker 3: I hope it goes away, and I would fully expect

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Speaker 3: that it does. The PIF were going to keep spending

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Speaker 3: money in golf, at least the PGA turnoy controls how

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Speaker 3: that money is spent, you know, so i'd you know,

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Speaker 3: if you're thinking about some you know, one of the

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Speaker 3: biggest sovereign wealth funds in the world. Would you rather

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Speaker 3: have them as a partner or an enemy? At the

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Speaker 3: end of the day, money talks, and you'd rather have

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Speaker 3: them as a partner.

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Speaker 2: But a lot of players didn't understand, and after the

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Speaker 2: stunning reversal of positions, PGA Tour Commissioner j Monaghan was

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Speaker 2: called a hypocrite to his face by players in a

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Speaker 2: heated meeting. Monahan told The Golf Channel he understood the criticism.

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Speaker 1: I understand the criticism I'm receiving around the hypocrisy and

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Speaker 1: me being hypocritical given my commentary and my actions over

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Speaker 1: the last couple of years.

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Speaker 2: The agreement will resolve the ongoing anti trust litigation between

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Speaker 2: the PGA and Live, but that may not matter to

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Speaker 2: the Justice Department, which has already been investigating the anti

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Speaker 2: trust issues. Joining me is litigator Patrick Louff, founding partner

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Speaker 2: of Luff Law. Patrick. Commissioner Monaghan, in the three M

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Speaker 2: Open last year in Minnesota said, as long as I'm

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Speaker 2: commissioner of the PGA Tour, no player that took live

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Speaker 2: money will ever play the PGA Tour again. Now, he said,

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Speaker 2: after this announcement, I recognize that people are going to

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Speaker 2: call me a hypocrite, But circumstances do change. What changed?

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Speaker 4: That is the big question. Certainly, the allegations of the

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Speaker 4: Live Tour and some of the golfers who joined that

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Speaker 4: tour are fairly damning and fairly strong in terms of

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Speaker 4: what the PGA tur is alleged to have done. And

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Speaker 4: so what changed. Perhaps the PGA Tour saw the writing

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Speaker 4: on the wall with respect to the likelihood of success

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Speaker 4: in this antitrust litigation that had been brought by the

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Speaker 4: Live Tour. But then the second question becomes, if that's correct,

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Speaker 4: how does this new entity also avoid scrutiny.

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Speaker 2: Yeah, so in this announcement with PGA and Live avoided

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Speaker 2: calling their proposed partnership or merger. They called it a

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Speaker 2: joint venture. But Live has spent a year litigating and

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Speaker 2: claiming PGA is a monopoly and use the word monopoly

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Speaker 2: more than forty times in the complaint. So this combination

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Speaker 2: would create an even larger monopoly with more money and

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Speaker 2: more power. So how can they get around that?

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Speaker 4: Well, it's a very fascinating question. I think that's a

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Speaker 4: question on a lot of attorney's minds right now. One

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Speaker 4: of the things that I find particularly surprising is with

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Speaker 4: two entities with this amount of money power and sophistication.

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Speaker 4: It's certainly been reported that there were no Anti Trust

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Speaker 4: council who were actively involved in the negotiation of this

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Speaker 4: joint venture. More to the point, though, I think the

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Speaker 4: law is fairly clear that it's not going to matter

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Speaker 4: what they actually call it. For example, if you look

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Speaker 4: at the recent decision in the American Airlines and Jet

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Speaker 4: Blue case, they didn't call their agreement a merger. They

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Speaker 4: called it the Northeast Alliance, in which they had agreed

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Speaker 4: to operate as one fleet in the New York City

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Speaker 4: and Boston area for most flies. But of course the

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Speaker 4: federal court that was asked to review the Department of

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Speaker 4: Justice's complaint certainly didn't care whether it was called a merger,

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Speaker 4: whether it was called an alliance, or whether it was

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Speaker 4: called a joint venture. The proof is in the putting

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Speaker 4: in terms of what are the actual facts and what

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Speaker 4: of the legal standards that are applied to those facts.

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Speaker 2: Live Golf has been surrounded by controversy since its launch

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Speaker 2: in twenty twenty eight. Two critics have accused the Sovereign

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Speaker 2: Wealth fun of sportswashing, using live golf to distract from

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Speaker 2: the kingdom's history of human rights violations, and the nine

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Speaker 2: to eleven Families group has slammed the merger. Should those

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Speaker 2: things play any part in or can they play any

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Speaker 2: part in whether the merger goes.

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Speaker 4: Through in terms of the legal effect, I think the

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Speaker 4: answer is pretty clearly no. But certainly one of the

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Speaker 4: things that renders this particularly fascinating is that it's not

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Speaker 4: simply a run of the mill corporate merger. It's not

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Speaker 4: simply a run of the mill antitrust case. It is

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Speaker 4: a number of those things, all intertwined with these very large,

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Speaker 4: substantial geopolitical problems or questions I say, that have been

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Speaker 4: going on since the beginning of the strategic alliance between

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Speaker 4: the United States and the Kingdom of Saudi Arabia, going

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Speaker 4: back to eighty years.

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Speaker 2: What do we know about? What do we know about?

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Speaker 2: What the structure will be? What do we know about

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Speaker 2: this agreement? So far?

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Speaker 4: We don't know a lot about, at least the granular details,

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Speaker 4: but we do have some interesting insights into the broad structure.

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Speaker 4: It appears as though, in very broad strokes, the PGA

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Speaker 4: Tour will essentially be running the new entity, and the

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Speaker 4: public investment sign of Saudi Arabia is essentially the financial backer,

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Speaker 4: and so there will be this new organization that includes

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Speaker 4: both PGA Tour Live Tour and the European Professional Golf Association. Now,

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Speaker 4: what's I think very interesting about what has been reported

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Speaker 4: is that the PIF appears to have a forty nine

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Speaker 4: percent interest in this broader entity that has been created,

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Speaker 4: and yet at the same time, the head of the

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Speaker 4: PIF is the chairman of the board of directors this organization.

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Speaker 4: It also appears that the PIF has essentially a right

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Speaker 4: of first refusal on future investment into this entity. And

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Speaker 4: what that means is that the PIF has a very

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Speaker 4: very very strong role in this future organization, even if

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Speaker 4: the PGA Tour can ultimately say that the PIF is

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Speaker 4: a minority shareholder or a minority interest holder.

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Speaker 2: I mean, what happens when there are tournaments in Saudi Arabia?

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Speaker 2: Can women attend without having hajiebs on? I mean, has

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Speaker 2: anyone said anything about that.

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Speaker 4: I'm not sure how that has played out with respect

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Speaker 4: to any events that the Live Tour has hosted, but

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Speaker 4: I think certainly we can look at what happened with

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Speaker 4: the recent World Cup in Qatar, as well as how

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Speaker 4: things would be handled in a potential World Cup in

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Speaker 4: twenty thirty in Saudi Arabia. I think one of the

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Speaker 4: l lessons from the World Cup in Qatar was that

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Speaker 4: despite very vehement promises that were made, at least some

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Speaker 4: of them appear to have not been upheld. And at

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Speaker 4: the point when the tournament was about to be put on,

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Speaker 4: I think in some sense you could say it became

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Speaker 4: a FATA complete between the International Soccer governing buddy and Qatar,

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Speaker 4: because at that point there was very little strategic ability

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Speaker 4: for FIFA to simply withdraw and choose not to hold

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Speaker 4: the tournament. And I wonder what sort of mechanisms you

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Speaker 4: can have, or even could ask for that would ensure

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Speaker 4: these sorts of things that Western countries I think are

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Speaker 4: very cognizant of and have criticized Saudi Arabia, Qatar and

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Speaker 4: other Middle Eastern countries for at large.

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Speaker 2: Let's tie up the antitrust angle. The Justice Department for

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Speaker 2: a year has been investigating possible anti competitive practices of

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Speaker 2: the PGA. So what do you think the chances are

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Speaker 2: that the Justice Department will oppose this on antitrust grounds.

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Speaker 4: I think it's quite likely it will be a pose.

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Speaker 4: The question is going to be what is the likelihood

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Speaker 4: of success? And I think others have rightly pointed out

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Speaker 4: the devil really will be in the detail. What I

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Speaker 4: can say, though, is that recent successes by the Justice

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Speaker 4: Department in other areas show us that this may be

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Speaker 4: a very very difficult proposition to sell under anti trust law.

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Speaker 4: You have the failure of the American Airlines and Jet

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Speaker 4: Blue agreement. You have the failure of the Penguin and

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Speaker 4: Simon and Schuster agreement that related only to the market

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Speaker 4: for top selling bestseller books. And I think the Penguin

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Speaker 4: and Simon and Schuster litigation is going to be particularly

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Speaker 4: instructive because you've got a very parallel situation with sort

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Speaker 4: of the top of the pyramid producers and a very

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Speaker 4: very limited demand from the industry for these services. You've

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Speaker 4: got things like very difficult market entry for other booksellers,

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Speaker 4: for example, to compete for these services of these authors,

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Speaker 4: and ultimately that merger was unsuccessful.

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Speaker 2: And also the UK's Competition and Market Authority and the

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Speaker 2: EU's Competition Authority will be looking into this, and the

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Speaker 2: EUS is known to be tougher in many circumstances than the.

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Speaker 4: US unquestionably, and I couldn't agree more. The fact that

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Speaker 4: this appears to be difficult from a US antitrust law

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Speaker 4: perspective suggests to me that it is even less likely

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Speaker 4: to be approved by European competition reviewers.

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Speaker 2: Let's talk about sponsorships. You know, we haven't heard that

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Speaker 2: much from sponsors. I mean, will sponsors stay with this?

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Speaker 4: I think they likely will. Again, this is the very

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Speaker 4: interesting question that's swirling around in what I mentioned of

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Speaker 4: the geopolitical question, the legal questions, potentially the ethical questions

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Speaker 4: that are involved. Certainly, what comes to mind is the

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Speaker 4: advertiser's flight from Twitter over the last however many months

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Speaker 4: since Elon Musk took over. And again, what I would

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Speaker 4: really look to as precedent is what did advertisers do

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Speaker 4: with the World Cup in Qatar? I think ultimately the

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Speaker 4: World Cup had no difficulties finding willing sponsors, and I

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Speaker 4: think here too, you're going to find willing sponsors, particularly

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Speaker 4: because I think it's fair to say the sponsorship generally

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Speaker 4: of professional golf has always been a a more niche

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Speaker 4: type of sponsorship market. I mean the biggest advertisers in

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Speaker 4: PGA that you see are Rolex and net Jets, So

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Speaker 4: I think it's likely that you won't see any difficult

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Speaker 4: these in finding willing sponsors, and frankly to the extent

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Speaker 4: that you would, my understanding is that the PIF is

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Speaker 4: going to shore up any shortcomings. In fact, I believe

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Speaker 4: it's been reported that the PIF is is going to

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Speaker 4: be the premier sponsor of the new organization.

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Speaker 2: So then looking at it from that point of view,

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Speaker 2: does it seem like this whole thing came down to

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Speaker 2: money and the vast amounts of money that Saudi Arabia

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Speaker 2: has to pour into things like boff and soccer.

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Speaker 4: That's exactly right. In fact, I think there's no better

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Speaker 4: proof that that is the case than Rory McElroy's comments yesterday.

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Speaker 4: And of course Rory McElroy has been very very outspoken,

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Speaker 4: really I say, the poster child of the opposition of

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Speaker 4: the PGA tour against live golf and the quote unquote

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Speaker 4: affection to live golf, and so everyone, I think was

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Speaker 4: rightfully curious to hear what Rory's reaction is going to

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Speaker 4: be when this came out, and what he said was,

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Speaker 4: you know, despite his frankly close to outright hatred of

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Speaker 4: Live Golf. He thinks that this agreement ultimately is better

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Speaker 4: for the future of golf because of the influx of

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Speaker 4: capital that it brings to the game.

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Speaker 2: There seems to be hostility between the players who went

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Speaker 2: to Live and the players who stayed with the PGA.

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Speaker 2: Here's what Rory McElroy said.

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Speaker 3: There still has to be consequences to actions. You know,

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Speaker 3: the people that left the PGA tour rapidly harmed this

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Speaker 3: tour started litigation against it, like we can't just welcome

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Speaker 3: them back in, like that's not going to happen. And

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Speaker 3: I think that was the one thing that Jay was

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Speaker 3: trying to get across yesterdays, like, guys, we're not just

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Speaker 3: going to bring these guys back in and pretend like

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Speaker 3: nothing's happened.

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Speaker 2: We'll have to wait to see what happens there. But

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Speaker 2: Bloomberg columnist Stephen Carter raised the possibility that there might

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Speaker 2: be lost suits by golfers who believe that they were,

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Speaker 2: you know, hoodwinked by the PGA. They left millions of

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Speaker 2: dollars on the table and didn't join Live Golf because

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Speaker 2: of what the PGA had said.

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Speaker 4: I think the lawsuits themselves are very likely the probability

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Speaker 4: of success, it's a more difficult case. But what I

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Speaker 4: will say is one of the things that's going to

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Speaker 4: be very important for this new entity, even in order

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Speaker 4: to bolster its anti trust defense, is going to be

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Speaker 4: that this is better for individual golfers. And this is

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Speaker 4: why it's so important to see how the ultimate agreement

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Speaker 4: look in the future, both with respect to how the

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Speaker 4: entity will relate to sponsors, how the entity will relate

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Speaker 4: to host golf courses, and of course, how the entity

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Speaker 4: is going to relate to these golfers themselves, because if

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Speaker 4: it turns out that Tiger Woods, being a very good example,

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Speaker 4: Rory Nakelroy or any others are not significantly improved in

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Speaker 4: terms of their earnings, that's problematic both individually and it's

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Speaker 4: problematic from an anti trust perspective.

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Speaker 2: I know that you thought this was the likely endgame

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Speaker 2: for live golf from the beginning. Tell us why.

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Speaker 4: I don't think that the LED Tour ultimately thought that

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Speaker 4: they were going to have a free standing golf tour.

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Speaker 4: I think it's probable that it would work for a time,

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Speaker 4: but I really do think that they saw they had

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Speaker 4: a very strong claim against a PGA tour for the

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Speaker 4: anti trust allegations that they've made. In fact, if you

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Speaker 4: actually look at their complaints, one of the things that

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Speaker 4: they used in support of their claims is that they

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Speaker 4: didn't frankly see that the entity was sustainable long term,

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Speaker 4: and that was precisely why this antitrust scrutiny was important.

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Speaker 4: And so really I think it was leveraging the strengths

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Speaker 4: of the anti trust plans that they had, along with

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Speaker 4: the financial wherewithal that they could bring to the table

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Speaker 4: that really resulted in this agreement.

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Speaker 2: And now we'll wait to see if any regulatory authorities

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Speaker 2: in the US, the UK, or the EU try to

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Speaker 2: stop the merger. Thanks so much, Patrick. That's Patrick Luff,

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Speaker 2: founding partner of Luff Law. And that's it for this

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Speaker 2: edition of The Bloomberg Law Show. Remember you can always

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Speaker 2: get the latest legal news on our Bloomberg Law Podcast.

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Speaker 2: You can find them on Apple Podcasts, Spotify and at

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Speaker 2: www dot Bloomberg dot com, slash podcast Slash Law, and

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Speaker 2: remember to tune into The Bloomberg Law Show every weeknight

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Speaker 2: at ten pm Wall Street Time. I'm June Grosso and

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Speaker 2: you're listening to Bloomberg,